The S&P 500 and many other indexes are extremely expensive. The cyclically adjusted price earnings (CAPE) ratio for the S&P 500 is 29.87, which is just about to pass the 1929 peak CAPE ratio. However, the situation isn’t much better around the world. The German stock index has a CAPE ratio of 19.6, the Dutch index 21.6, Australia 17.5, India 20.3, and Japan 24.9. These CAPE ratios of around 20 mean that you can expect investment returns of around 5% or lower in the long term.I find any kind of stock market return below 10% a crazy investment because the risk of owning stocks is simply too high for anything less than 10%.

You might see some countries as less risky and others as riskier. However, in the long term, it all revolves around productivity and value creation. Therefore, temporary trouble—which scares most investors away—in combination with a positive long-term outlook is usually perfect bargain hunting territory.Short term volatility might be high due to political news or currency depreciation, but if you own stocks, the underlying assets will always give you a margin of safety, no matter where they are in the world. This, of course, is only if the assets are tangible and not financial.

Russia is the cheapest market with a CAPE ratio of just 5.3. This is due to economic sanctions, and low oil and commodity prices. However, some stocks are extremely cheap.

Other cheap countries are Brazil with a CAPE ratio of 10.7, Turkey with 10.1, and China with 14.1. Those countries offer plenty of bargains, the kind of bargains that many are going to bang their head against the wall in 5 years and wonder why they bought stocks like Foot Locker / NUGT / KORS etc...

Finding a bargain is one of the most beautiful things in investing. However, you have to turn many stones to find them. In 95% of cases, a stock is cheap for a good reason, so be very careful when investing in cheap stocks.However, sometimes the stock is just cheap and you can’t find anything wrong with it. This is simply because the market doesn’t recognize the value in such a stock. The problem is that it might take a very long time before the market recognizes the value. Invest safely, diversify, reduce your risk, look long term.